Posted on 05/05/2008 5:43:20 PM PDT by Lorianne
No answer? LOL!
This sounds like a great question. I'll be happy to offer an explanation of why the Fed's buying something, but first you'll need to tell us if you're talking about the Fed loaning money or guaranteeing other people's loans. If there's a case where the Fed's actually buying something, please tell us just what it is.
Thanks.
LOL!
Poor Todd. Knows everything. Is wise about nothing.
That was never disputed.
I'm just glad we could show you that M2 can grow without the help of the Fed
We are just going to have to continue to disagree on this point. Sure if there are excess reserves lending can expand, but the banking system does not generate legal tender (money acceptable by the US government to settle government debts) all on its own without the FED.
Finally, I think you will subscribe to the previously agreed upon point that banks cannot lend money that is not somehow or other on deposit with the bank, i.e. if my customers deposit $1,000,000, I the bank will go bankrupt when I attempt to issue $2,000,000 in checks for deposit in other banks based on loans that I attempt to originate.
That was never disputed.
Except by you.
I'm just glad we could show you that M2 can grow without the help of the Fed
Sure if there are excess reserves lending can expand
Excellent!
Finally, I think you will subscribe to the previously agreed upon point that banks cannot lend money that is not somehow or other on deposit with the bank, i.e. if my customers deposit $1,000,000, I the bank will go bankrupt when I attempt to issue $2,000,000 in checks for deposit in other banks based on loans that I attempt to originate.
As I've said over and over, banks can't lend out money they don't have on deposit (unless they borrow).
Glad you understand now that M2 and MZM can grow when new loans are made. Even if the Fed doesn't lift a finger. It was hard work but you finally learned something new. I'm glad I could help :^)
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